Qantas claims multi-million damages from Rolls-Royce

Friday 3 December 2010 09:24 BST

Failures: the damaged engine that forced a Qantas A380 jet into a forced landing last month

Qantas Airways could claim up to A$60 million (£37.5 million) from Rolls-Royce over faulty Airbus A380 engines and loss of business, as investigators concluded today that a design fault was the likely cause of a mid-air engine failure last month.

Qantas said in a court claim filed that Rolls-Royce was in breach of duty and may have misled the airline when it supplied defective engines.

The airline did not quantify its loss but said it suffered damages from the grounding of its fleet, expected delivery delays on further A380s and because it cannot use the jet on routes between Australia and Los Angeles.

Analysts say damages to Qantas could reach A$60 million, excluding the costs of repairing the damaged plane, while the airline also faces costs from reduced capacity over the southern hemisphere's summer and potential damage to its reputation.

A Rolls-Royce spokesman declined to comment on the claim but said: "Rolls-Royce will continue to work with the investigating authorities and the regulators to ensure compliance with safety standards."

The Australian Transportation Safety Bureau today said the engine failure was most likely caused by a design fault that led to fatigue cracking and oil leakage that started a fire.

"It's possible that this is a one off. But the results of inspections will tell us if that is the case," said Martin Dolan, the ATSB's chief commissioner.

The ATSB said it was satisfied that Rolls-Royce had addressed immediate safety issues, but safety directives limit Qantas's use of its fleet. Many planes have been forced to stay on the ground for checks and to have their engines replaced, while Qantas has been unable to fly to capacity on its longest and most lucrative routes.

S&P analyst Shukor Yusov said the safety report would put carriers who use the A380 in the spotlight.

"The problem right now is with Qantas and Rolls-Royce, but of course there will be scrutiny on Singapore Airlines and Lufthansa as well because they have similar aircraft with similar engines," he said.

The three airlines operate a combined 21 aircraft, just over half of the 40 A380s in service.

"Our priority at this stage is to manage this from an operational standpoint and ensure the continued safe operation of our A380s, with the least amount of disruption to our customers' travel plans," said Singapore Airlines spokesman Nicholas Ionides.